1. During this century, the growth rate of real GDP in
the United States has averaged approximately
a. 1 percent.
b. 3 percent.
c. 6 percent.
d. 10 percent.
2. Economists use the term "business cycle" to refer to
a. the growth of small businesses into major corporations.
b. changes in products that occur from improved technology.
c. fluctuations in economic activity, measured by GDP or unemployment.
d. periods of increases and decreases in the rate of inflation.
3. The labor force participation rate of women in the
United States has been
a. increasing for several decades.
b. decreasing for the past several decades after increasing dramatically in the early 1900s.
c. approximately constant during the last three decades.
d. decreasing since the early 1900s.
4. Suppose there was a country with a population of 1000,
of which 200 were unemployed and 500 were employed. Which of the following
a. The numbers have been calculated incorrectly as there are 300 people who are neither employed nor unemployed.
b. The labor force participation rate is 50 percent.
c. The unemployment rate is 20 percent.
d. There are 700 individuals in this country's labor force.
5. The type of unemployment caused by changes in the business
a. structural unemployment.
b. natural unemployment.
c. frictional unemployment.
d. cyclical unemployment.
6. An individual should continue to spend time searching
for a job as long as
a. all salary offers are below what the person expected.
b. the marginal gain from additional search exceeds the marginal cost.
c. job openings are available in the individual's field.
d. information is available that the individual has not yet collected.
7. Suppose an economy is operating at its maximum sustainable
output rate. It is not in a recession, but neither is it experiencing a
boom. Which of the following would be true?
a. The economy would be considered at full employment.
b. Actual GDP would equal potential GDP.
c. Actual unemployment would equal the natural rate of unemployment.
d. All of the above are true.
8. Which of the following persons would be considered
unemployed by the official government definition?
a. George, a mathematician who returned to graduate school after failing to find a job the last four months
b. Gwen, a medical student, who is still in college and is not working
c. Morgan, who is employed part-time but desires a full-time job
d. Ralph, an auto worker vacationing in Florida during a layoff at a General Motors plant due to an annual change-over in models
9. During a recession, which of the following will be
a. The actual rate of unemployment will be lower than the natural rate.
b. Actual GDP will be lower than potential GDP.
c. Actual employment will exceed what is considered full employment.
d. Actual inflation will be higher than was anticipated.
10. Which of the following is not a harmful effect of
a. Unanticipated inflation increases the risk associated with long-term contracts.
b. Inflation distorts the information delivered by market prices.
c. Individuals will waste productive resources protecting themselves from the effects of inflation.
d. Inflation increases the purchasing power of the dollar.